HeidelbergCement to pay extra to sell high-yield bond

Published:
23 June 2010

HeidelbergCement is paying a premium to sell high- yield bonds as corporate-debt sales start to revive.

The building materials company increased the size of the deal by 30 per cent to EUR650m (US$614m) and set the yield of the December 2015 notes at 6.875 per cent, more than the 6.75 per cent it paid when it sold EUR650m of similar-dated notes in January. Those securities now trade at 6.5 per cent, according to Bloomberg composite prices.

“The new Heidelberg bond looks cheap compared with existing notes, and the company is offering a new-issue premium that ensures it sells,” said Alex Moss, a fund manager at Insight Investment Management in London, which manages 100 billion pounds (US$147bn) of assets. “It’s likely to be snapped up by investors looking for more yield.”

Company bond sales in Europe jumped to EUR4.9bn yesterday, up from a daily average of EUR1.9bn this month, according to data compiled by Bloomberg. Measures by governments to cut record budget deficits and a US$1trn European Union-led bailout package for the region’s most troubled economies are containing the sovereign debt crisis, which started in Greece four months ago.